An agent’s liability can be based upon her failure to explain or properly advise about the documents in a transaction, especially where certain omissions or errors occur. The most common source of malpractice is found in the Seller’s Property Disclosure Statement (the SPDS). Inconsistencies, omitted or vague answers in this document must be pointed out and the buyer advised to investigate the omission. Too many agents simply pass the SPDS on to the client without reviewing it carefully.

On the other hand, too many buyers assume the agent is looking out for them and do not read the documents carefully. This, of course, is the agent’s first line of defense, the careless buyer. However, the typical buyer is not expected to be the expert – that is what the agent is getting paid for. Good advice to any person involved in a real estate transaction is to assume nothing, especially that his agent will notice any problems in the documents and point them out to the client.

According to a recent case, a buyer’s agent may be liable to the seller for failing to disclose that his client does not have the financial ability to close on the property. Until this case was decided, it was generally the law that such a disclosure would violate the agent’s duty to his own client, but that limitation no longer applies. This ruling is particularly significant in today’s financial climate.

Caution:

This writing is not legal advice. Please do not treat it as such or rely on it without consulting your own attorney or advising your clients to do so. This material is presented for educational purposes only, to apprise real property owners of the current general state of the law of real estate, including Arizona foreclosure litigation and possible defenses available to a borrower. Each borrower’s or owner's facts and circumstances are different and the law discussed herein may not apply to the reader's particular situation.